Using Monzo for budgeting

I signed up to Monzo little over two weeks ago now after seeing an advert on the T.V which caught my eye due to the way Monzo seems to work, it appears to fit into the way I currently manage my money using YNAB but I have yet to put any of my actual money into my Monzo account, I feel a bit hesitant, YNAB is my safety blanket if you will, a layer on top of my bank account I know exactly how much is in each category and can register transactions easily and see how much I have on hand in each category to spend this does seem possible with pots? But I do wonder how Monzo would know that I have spent £10 on Groceries when the transaction shows up in the app do you have to assign it to that pot?

When you first signed up to Monzo did you put a little bit of money into the account to begin with just to get used to how things work? I was thinking of adding my grocery budget to Monzo this month because I could add the amount to the grocery budget and see how that works. I am worried in case something goes wrong I guess. Long story short, before I started using YNAB my money situation wasn’t great, YNAB kinda saved me but I really want to give Monzo a shot if any of this even makes sense.

I am sure this has been asked before but even after reading other stories from people it is still sometimes nice to ask the question yourself with your use case so sorry if I am going over old ground.

Thanks

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Hi, welcome to Monzo!

I started by putting just a bit of spending money into the account, and using it for day-to-day transactions. This was three years ago, before Monzo offered a full current account, and they were still testing features, so it was the only option.

I don’t see any problem suggesting you start by putting some spending money on a regular basis into your Monzo account, and try it out - until you can decide how comfortable you are with it and whether it works for you.

I think you’ll almost certainly enjoy what the account has to offer. Please report back! :+1:

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Welcome! :wave:

You can use the summary tab in Monzo to find how much you have spent in each category (and you can set a budget for each of those categories). Monzo will auto-assign categories to transactions, based on the merchant that you bought from. You can edit the category assigned, if it is incorrect.

If you decide that you want to put categories into pots, that’s fine. Monzo won’t automatically move money out of a pot based on what category your transaction was in, however I believe this can be achieved through IFTTT if that is what you want. Though you would have to make sure you still have enough money in your main account balance to make your payment for this approach, as the pot withdrawal would happen after the fact.

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I think that is what I am going to do for the time being, put a little bit of money that I would usually have for spending and use Monzo for that for the first month and see how things go.

I guess it is just getting my head around how things will work, I suppose I could still use YNAB as that additional layer on top of Monzo if I really wanted which would allow me to track the money I have on hand in each category.

I will certainly report back to let you know how I get on. :slight_smile:

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Hope you find a solution that works for you. Welcome!

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Thanks @katewilliams :slight_smile:

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Just deposited my first £10 :money_with_wings:was amazed at how quickly it happened HSBC -> Monzo. I got a notification as soon as I hit the send button which was pretty cool.

Now to spend some of that money :slight_smile:

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We were YNABbers until we went Monzo. We used to rely heavily on rule 3, roll with the punches, and were professional whack-a-molers. Moving to Monzo was a mind shift, but we realised we really had ‘committed spend’ and everything else so all the granular control available in YNAB was just causing us extra work…

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It is trying to get out of the comfort zone that YNAB brings I think. I know exactly how much money I have for Sally’s Birthday and Christmas etc.

Will see how I get on with Monzo over the coming weeks but any hacks for migrating and breaking the “mould” would be appreciated :slight_smile:

My first tip would be to look through your YNAB categories and think about which are ‘real’ and which aren’t. So we have a Monzo Pot for each person’s birthday in the family and Christmas. We have an annuals pot for our annual bills. But we used to have a YNAB category for darling daughter’s activities, gas and electric etc. which is now all covered by the committed spend. There were also a number of categories that we were constantly juggling that weren’t really categories at all, they were just ‘from what’s left’… We don’t worry about those things any more, over a few months we’ve come to rely on ‘left to spend’, which means we spend more in the first and last weeks of the month and are way more cautious in the middle!

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This is so so useful. Pots are essentially the same as categories in a sense then.

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I’m still running YNAB but don’t want to. The only reason is because I’m running down several other accounts and so need to track what’s going on with them. But the ultimate goal is to get everything into the Monzo Joint Account because once everything is there, I will have an accurate overview of what is committed, what is in (Monzo) savings, what is put aside for upcoming non-committed spending (pots) and what is left to spend.

YNAB, while fantastic with multiple accounts, just isn’t necessary if Monzo is your central all-singing, all-dancing account - the budgeting and display tools in the app are really all that is needed to keep on top of finances. And I’ve tried almost every budgeting/financial-software/aggregation-service package out there for the last 20+ years!

Keeping things simple really helps. Good luck!

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So, I have put a lot of my none committed spending into Monzo today - I have created a few pots.

For example; Fuel. I have put some money from my available account balance into the Pot much like I would have done in YNAB.

My question - The amount in the pot has gone from my available balance which is what I would expect, lets set my balance says I have £10 available however there is £100 in the Fuel pot, I go to the petrol station and fill up my car with £40 will the £40 transaction be declined (I have no overdraft) or will Monzo know in the background that my account has £110 available and the transaction will process I will just have to take the £40 out of the pot afterwards? Or have I missed something.

it will be declined , you can only “spend” what is available in your main account , Monzo can’t access your pots to cover the bill

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I’m pretty sure Monzo only uses the amount shown in your balance and won’t touch Pots at all, they are a manual method of money management (say that three times fast!).

So, your £40 transaction would be declined.

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It seems using the budget function would be better suited to this task. Pots are like envelops in a drawer that cash isn’t in my wallet so I can’t spend it, I first need to get some of that money out of the envelope.

Thank you

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Spot on.

That’s how i use it.

Transport budget of £x

Just make sure fill ups at supermarket petrol stations come out of that category and not Groceries otherwise Budget is inaccurate.

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Pots can be used as non-interest savings pots or ‘build-up’ pots. Let’s say your car MOT is due in 12 months and costs £30, if you set up a POT called [cough] MOT, then set-up a monthly transfer to that pot of £2.50 per month. After 12 months, you can withdraw from the pot to your main account, pay the MOT and watch that :car: sail through the test*

*Sequence shortened for effect. Car may not pass in real life or may need additional expenditure to pass. Subject to status. Check T&C’s, etc.

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So you are able to sort your transactions by Categories - generally Monzo does it automatically and gets it right

If you disagree it is very easy for you to change it yourself

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Thank you everyone, I had it in my head that pots were like categories which in YNAB you use to slice up your money from the available balance, much like the Budget function within Monzo thanks for clearing that up for me. I understand now.

One thing I am a little puzzled on though is the figure you are presented with on the summary page “You’re set to have xxx left over” how is this calculated because I can’t seem to work it out at all. None of the calculations I run leave me with the figure presented in this space.

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